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Ownership Structure of Business Entities - Explained

Who owns a Business Entity?

Written by Jason Gordon

Updated at April 5th, 2023

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What is the ownership structure for a business entity?

Ownership structure concerns the internal organization of a business entity and the rights and duties of the individuals holding a legal or equitable interest in that business. As owner of the business entity, it is important to understand how the ownership structure of a particular business entity is organized and what that means for the owners rights.

  • Example: A shareholder, as owner of a corporation, has certain rights. These rights are distinct from those of members of a limited liability company. Further, within the corporation, a holder of preferred stock may have different rights than the holder of common stock.

Visit the following articles for more information on ownership structure:

  • A Detailed Explanation of the Sole Proprietorship
  • A Detailed Explanation of the General Partnership
  • A Detailed Explanation of the Limited Liability Company
  • A Detailed Explanation of the Corporation
  • A Detailed Explanation of the Non-Profit Entity

Next Article: Control Within Business the Entity Back to: BUSINESS ENTITIES

Discussion Question

Why do you think different types of business entity allow for unique ownership structures? Why do you think ownership structure is so important for business owners?

Practice Question

Can you think of any situation where ownership of the business entity became an issue between the founders or co-owners of the businesses? What was the basis of the dispute and what was the outcome?

  • A good example is the dispute over ownership interest in Facebook, Inc., by the Winklevoss brothers. The genesis of the dispute is that their interest in the business was not compensated when they left the business early in its existence.

Related Topics

  • Business Entities (Intro)
  • Why is studying business entities important?
  • Considerations When Forming a Business Entity
  • Holistic (Detailed) Overview of Setting Up a Business Entity
  • What are Business Entities?
  • What is a Closely-held vs Publicly-held Business?
  • What are the main types of business entity?
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  • What is Creation of a business entity?
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  • Forming an LLC in Nevada or Wyoming
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  • What is Continuity of a business entity?
  • Business Continuity Planning
  • Buy Sell Agreements
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  • What is the Ownership structure of a business entity?
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  • Parent Company
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  • Wholly-Owned Subsidiary
  • Operating Subsidiary
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  • Conglomerate
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  • What are the main characteristics of a Limited partnership?
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  • What are the main characteristics of a Limited liability partnership?
  • What are the main characteristics of a Limited liability company?
  • Forming an LLC
  • Articles of Organization
  • Operating Agreement or LLC Agreement
  • Why You Need an LLC Agreement
  • LLC Compensation of Members
  • LLC Taxation
  • Converting to an LLC
  • What are the main characteristics of a Corporation
  • Articles of Incorporation 
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  • Corporate Bylaws
  • Exiting the Corporation
  • Dissenter's Rights
  • What are the requirements to be an S Corporation?
  • Non-Profit Organization
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  • Private Foundation
  • A Detailed Explanation of the Sole Proprietorship
  • Taxation of Sole Proprietorship
  • A Detailed Explanation of the General Partnership
  • 50/50 Partnerships: Never a Good Idea
  • Publicly-Traded Partnerships
  • A Detailed Explanation of the Limited Liability Company
  • A Detailed Explanation of the Corporation
  • Keepwell Agreement (Letter of Comfort)
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  • A Detailed Explanation of the Non-Profit Entity
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ownership structure business entities

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